FCA can settle Jeep, Ram EcoDiesel emission case with fine, recall

While VW is moving toward the end of buybacks, payments, and fines for eight years of cheating on diesel emission standards, Fiat Chrysler is still in the thick of its own diesel mess involving Jeep SUVs and Ram trucks.

On February 2, the U.S. Justice Department offered to let the company move forward if it recalls all 104,000 EcoDiesel models of the Ram 1500 full-size pickup and Jeep Grand Cherokee to modify their engine-control software sold between 2014 and 2016.

The company would also have to pay a so-far-unspecified but "substantial" fine for its actions.

A "proposed framework" for settling the charges was extended to Fiat Chrysler Automobiles on January 27, according to a report by Bloomberg, which saw a copy of the document sent to FCA.

Lawyers for the Justice Department wrote the settlement must incorporate "very substantial civil penalties” that would deter future violations of emission rules and that “adequately reflect the seriousness of the conduct that led to these violations,” according to the article.

The U.S. Environmental Protection Agency and California Air Resources Board formally submitted a complaint against FCA last May, saying it had used illegal software to pass emission tests on "rolling road" dynamometers in laboratory testing.

On the road, however, vehicles fitted with the company's 3.0-liter V-6 "EcoDiesel" engines emitted more than the allowed levels of nitrogen oxides, the complaint said.

FCA acknowledged in a term sheet, Bloomberg said, that civil penalties would be needed to settle the complaint, along with environmental mitigation efforts and modifications to the vehicles—though no VW-style buybacks.

The Justice Department said that while Fiat Chrysler may have committed to efforts to promote low- or zero-emissions “mobility projects” in its document, those would not substitute for substantial penalties that would deter any future violations.

The company has denied intentional wrongdoing; CEO Sergio Marchionne referred to the initial complaint last year as "hogwash."

But the settlement letter seen by Bloomberg refers to “compelling evidence” the company knew—or had reason to know—its vehicles did not comply with emission standards.

Further, the agency charged that Fiat Chrysler deliberately misled regulators, suggesting its conduct was “egregious," similar language to that used to describe Volkswagen's actions.

At a conference early this month, CARB chief Mary Nichols called it "interesting" that Fiat Chrysler had chosen to use the same law firm that represented VW Group during its diesel scandal.

A civil settlement like the one proposed does not end any criminal investigation by the Justice Department into FCA's actions.